BASF, Eramet abandon $2.6 billion Indonesian nickel project that threatens isolated tribe

JAKARTA — German chemical giant BASF and French mining group Eramet have pulled out of a multibillion-dollar “green energy” project in Indonesia over its impact on one of the world’s last indigenous tribes living in voluntary isolation.

In a press release published on June 24, the two groups announced that they had given up investing up to $2.6 billion in the Sonic Bay project, on the island of Halmahera, in the province of North Moluccas, Eastern Indonesia. The project would have seen the construction of a refinery producing around 67,000 tonnes of nickel and 7,500 tonnes of cobalt per year. These metals, essential ingredients for electric vehicle batteries, would have come from the nearby Weda Bay Nickel mine, the largest nickel mine in the world, in which Eramet holds a minority stake.

In its announcement, BASF said it would “stop all ongoing evaluation and negotiation activities for the Weda Bay project.”

The move follows a sustained campaign by activists who fear that the Sonic Bay refinery, which is effectively an extension of the Weda Bay Nickel project, will increase the risk of indigenous peoples in the area losing their lands. The Weda Bay Nickel concession overlaps rainforest that is home to hundreds of members of the Forest Tobelo people, according to Survival International, a British indigenous rights group, which has been lobbying BASF and German authorities to abandon the project.

“People who live in the forest”

The Forest Tobelo tribe are among the last indigenous groups still living in voluntary isolation from the rest of the world. They are thought to number between 300 and 500 nomadic hunter-gatherer peoples whose way of life is so closely tied to the environment that they call themselves O’Hongana Manyawa – the people who live in the forest.

The forest Tobelo avoid contact with the outside world. It is therefore unlikely that they will be able to be reasonably consulted on projects in their area or give their free, prior and informed consent (FPIC) for the use of their customary lands. Some members of the tribe have come out of their isolation and reported the loss of their forests to the mining concession.

So any investment in the Sonic Bay project would likely contribute to the continued destruction of the Forest Tobelo people’s forests, Survival International said.

This may be why BASF and Eramet withdrew from the project, said Pius Ginting, coordinator of the Indonesian NGO Action for Ecology and Emancipation of the People (AEER). BASF gave the reason that the supply of battery-grade nickel on the market has reduced and therefore does not need to invest as much to obtain supplies.

What he doesn’t mention, however, is that his home government, Germany, is legally bound to protect, respect and fulfil the rights of indigenous and tribal peoples and to improve their living and working conditions in the countries where they live. Indeed, Germany ratified the International Labour Organization’s Convention on Indigenous and Tribal Populations in 2021.

This would therefore make the involvement of any German company in a project like Sonic Bay that threatens indigenous people a violation of the convention, Pius said.

He also pointed out that WBN had performed poorly in a routine annual assessment of environmental parameters conducted by Indonesia’s Ministry of Environment and Forestry. Known as the PROPER assessment, it assigns a color-coded rating to companies’ performance, ranging from gold to green to blue to red to black; a gold or green rating means a company exceeds legal requirements.

In 2022, Weda Bay Nickel received a red rating, meaning it did not operate in accordance with current environmental and social regulations.

“Even if [BASF and Eramet] said the main reason [for their withdrawal] It is because of the market and the economy that we see that environmental risks are of course also taken into account because of WBN’s poor PROPER score,” Pius said.

He added that their abandonment of the project should be a wake-up call to the rest of the battery metals industry and the Indonesian government to improve the industry’s environmental, social and governance (ESG) performance.

A “no-go zone” to protect an indigenous tribe

Despite this development, WBN’s mining operations look set to continue as the government pushes for Indonesia to become a powerhouse in battery metal production. This means the people of Forest Tobelo will continue to be at risk of losing their forests, Survival International said.

The campaign group recently published a video An isolated Tobelo family from the forest approaches workers at a mining camp. According to Survival International, the family was begging for food after their rainforest was destroyed. The organization says similar scenes can be avoided by establishing a no-go zone, where no mining or other activity can take place.

Much of the nickel mined at Weda Bay goes to Chinese electric vehicle manufacturers. The mine’s majority shareholder is Tsingshan Holding Group, the world’s largest nickel producer. Tesla, which does not currently source nickel from Weda Bay but has signed deals worth billions of dollars with Indonesian nickel and cobalt suppliers, said in its 2023 impact report that it “studied the need for a no-go zone” to protect isolated indigenous peoples.

In a meeting with representatives of Survival International, Indonesian politician Tamsil Linrung also expressed support for protecting the Forest Tobelo people through the creation of a no-go zone.

“We will try to make this region a no-go zone. If not in the near future, perhaps after the next president is inaugurated. [in October 2024],” he said.

Respite — for now

For now, the news that BASF and Eramet are abandoning the refinery project brings some respite to the people of Forest Tobelo, said Caroline Pearce, director of Survival International.

“BASF’s withdrawal means that at least they will not be complicit in the destruction of the Hongana Manyawa. But Eramet and other companies continue to destroy the rainforest and the isolated Hongana Manyawa simply will not survive without it. They need to stop now, for good, before it’s too late,” she said.

But another senior official, Investment Minister Bahlil Lahadalia, accused of corruption and embezzlement in the revocation and regranting of mining permits, said negotiations were still ongoing for BASF and Eramet to invest in the refinery. He attributed their withdrawal to a drop in electric vehicle sales in Europe due to falling purchasing power, but said this would only be temporary.

“[The project] “The decision is still pending,” he was quoted as saying by Indonesian news website Tempo.co. “We are still in negotiations.”

Banner image: The Weda Bay Nickel mining concession which straddles the forests of the Tobelo Forest indigenous people. Mining activities were halted in September 2022 due to protests from the tribe. Image by Christ Belseran/Mongabay Indonesia.

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Article published by Hayat

Business, conflicts, environmentally damaging businesses, corporations, deforestation, drivers of deforestation, electric cars, energy, environment, forests, indigenous communities, indigenous groups, indigenous peoples, indigenous rights, land conflicts, mining, natural resources, tribal groups, isolated tribes

Asia, Indonesia, Moluccas, Northern Moluccas, Southeast Asia

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